Bribery charges hit Japan's rescue plan

Prime Minister struggles to save multi-billion bail-out of banks after Finance Minister is forced to resign

THE Japanese Prime Minister Ryutaro Hashimoto is struggling to restore the image of his government and to save the multi-billion dollar bail-out of his country's banks after being rocked last week by a bribery scandal.

Mr Hashimoto is proceeding cautiously in his choice of new Finance minister. Hikaru Matsunaga is a 69-year-old veteran legislator, who started his career as a public prosecutor. He takes over from Hiroshi Mitsuzuka, who was forced to resign to take the blame for the scandal.

Mr Matsunaga's appointment on Friday capped a week in which the Finance Ministry was shaken by the arrest of two bank inspectors, the resignation of both Mr Mitsuzuka and his deputy, and the suicide of a banking bureau official who had been summoned for questioning in the case.

"The arrest of Finance Ministry officials has badly tainted the nation's trust in the Ministry," Mr Matsunaga told reporters. "I will use this opportunity to strengthen discipline. If we find officials who committed wrongdoing, they will be severely punished."

The immediate goal of Mr Matsunaga, Mr Hashimoto and Koji Tanami, the head of the Cabinet councillor's office who was named vice minister for Finance, is to ensure the Ministry can focus on shoring up the financial system.

A $235bn (pounds 143bn) package to bail out banks and protect depositors has already been held up in parliament because of the scandal. Mr Hashimoto's scheme to get the rescue plan approved was thwarted last week when opposition law makers boycotted parliament on Tuesday to put pressure on Mr Mitsuzuka to resign.

A slump in consumer spending has also forced the Prime Minister and his party to draw up measures to stimulate the economy. That has put them at odds with many in the Finance Ministry, which insists that Japan's priority should be to cut spending to drive down the fiscal deficit.

Mr Matsunaga, a 10-term legislator from Mr Hashimoto's ruling Liberal Democratic Party, worked as a prosecutor in southern Japan in the early 1950s.

Analysts said he was a strong candidate to pursue reform at the Ministry, which has been beset with criticism over its management of the economy, its handling of racketeering scandals involving major brokerages last year, and the fact that it allowed the nation's banks to run up an estimated Y77,000bn (pounds 376bn) in bad loans.

"The signal is not for fiscal expansion, but for a [Finance Ministry] clean-up," said Shigenori Okazaki, a political analyst at SBC Warburg Japan.

Triggering the latest scandal was Monday's arrest of two Ministry bank inspectors - Koichi Miyagawa, 53, and Toshimi Taniuchi, 48 - on charges of taking bribes. Tokyo prosecutors raided the Ministry that day, and the next day raided the four banks suspected of offering the bribes - Dai-Ichi Kangyo Bank, Asahi Bank, Sanwa Bank and Hokkaido Takushoku Bank.

Opposition law makers forced Mr Mitsuzuka's hand when they boycotted parliament, blocking passage of the nation's supplementary budget. That package was passed on Wednesday, hours after Mr Mitsuzuka stepped down.

The vice minister for Finance, Takeshi Komura - the Ministry's top career bureaucrat - also resigned, although Toshiro Muto, director of the Finance Ministry's secretariat will retain his post "for the time being".

Mr Komura's replacement, Mr Tanami, faced the heat right away. He denied in his inaugural press conference on Friday a report in the Nihon Keizai Shimbun newspaper that the Ministry had instructed failed Yamaichi Securities to hide trading losses through off-the-book trades.

Yamaichi said in November that it planned to shut down, and admitted to hiding Y265bn in losses from such off-the-book trades.

Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'